A software developer is planning to develop, produce and sell new security software. The key parameter values of the three software packages under consideration are provided below. Parameters 1. Initial Cost ($) AC 650,000 KLM 740,000 2. Revenues ($) 350,000 at 450,500 at EOY1 EOY1 increasing by decreasing by $4,000 $5,000 annually annually thereafter thereafter Delta 790,000 450,500 at EOY1 increasing by 1% annually to EOY5 inclusively; $470,000 at EOY6 decreasing annually by $2,000 thereafter. 300,000 at EOY1 increasing by 2% annually thereafter 3. Operating costs ($) 180,000 at 252,000 at EOY1 EOY1 increasing by decreasing by 2% annually 1% annually thereafter thereafter 90,000 100,000 120,000 4. End-of-life salvage value ($) 5. Useful life (years) . 5 5 10 All parameter values are fictitious. EOY = End-of-year Industry standard for backhoes = 4 years MARR = 10% . 5. Delta's AEW over 30 years (it was repeated without changes to its initial parameter values). 6. 7. 8. The best software model based on the net future worth (NFW) criterion. The best software model based on the annual equivalent worth (AEW) criterion. AC's recovery period (years) based on the simple payback method. KLM's project balance" after 2 years based on the simple payback method. Is the KLM software model acceptable based on the discounted payback method? 9. 10. A software developer is planning to develop, produce and sell new security software. The key parameter values of the three software packages under consideration are provided below. Parameters 1. Initial Cost ($) AC 650,000 KLM 740,000 2. Revenues ($) 350,000 at 450,500 at EOY1 EOY1 increasing by decreasing by $4,000 $5,000 annually annually thereafter thereafter Delta 790,000 450,500 at EOY1 increasing by 1% annually to EOY5 inclusively; $470,000 at EOY6 decreasing annually by $2,000 thereafter. 300,000 at EOY1 increasing by 2% annually thereafter 3. Operating costs ($) 180,000 at 252,000 at EOY1 EOY1 increasing by decreasing by 2% annually 1% annually thereafter thereafter 90,000 100,000 120,000 4. End-of-life salvage value ($) 5. Useful life (years) . 5 5 10 All parameter values are fictitious. EOY = End-of-year Industry standard for backhoes = 4 years MARR = 10% . 5. Delta's AEW over 30 years (it was repeated without changes to its initial parameter values). 6. 7. 8. The best software model based on the net future worth (NFW) criterion. The best software model based on the annual equivalent worth (AEW) criterion. AC's recovery period (years) based on the simple payback method. KLM's project balance" after 2 years based on the simple payback method. Is the KLM software model acceptable based on the discounted payback method? 9. 10
